PARTNERSHIP OPERATIONS

Question 1 Answer:A

1/1/20 Capital Balance of B: 100,000.00

Add: Additional Invest of B in 2020 500,000.00
Less:
B's Drawings at end of 2020 -300,000.00
B’s capital balance on 12/31/20 -200,000.00
B’s Share in Net Loss for the year ended 12/31/20 -100,000.00
Divided by B’s interest in profit or loss 0.20
Net loss of ABC Partnership for year ended 12/31/20 -500,000.00

Question 2 Answer:B
1/1/20 Capital Balance of C: 400,000.00
Less:
C’s Share in Net Loss during 2020 -250,000.00
C’s drawings at the end of 2020 -100,000.00
12/31/20 Capital Balance of C 50,000.00

Question 3 Answer: C
12/31/20 C’s Capital Balance 320,000.00
Add: C’s drawings at the end of 2020 400,000.00
Less:
C’s additional investment during 2020 -300,000.00
C’s capital balance on 1/1/20 -200,000.00
C’s share in partnership profit for year ended 12/31/20 220,000.00

C’s share in profit for the year 2020 220,000.00

Less: Interest on original capital contribution of C -20,000.00
C’s share in rem. profit after interest, salary & bonus 200,000.00
Multiply by number of partners 3
Remaining profit after interest, salary and bonus 600,000.00
Divided by 80% 0.80
Net profit after salary and interest but before bonus 750,000.00
Add: Total interest and salary 300,000.00
Partnership profit for the year ended 12/31/20 1,050,000.00

Question 4 Answer: C
Interest on capital 30,000.00
Salary 160,000.00
Bonus to A 150,000.00
Equal share in remaining profit 200,000.00
Total share of A in partnership profit 540,000.00

Partnership profit for the year ended 12/31/20 1,050,000.00

Less: Total interest and salary -300,000.00
Net profit after salary and interest but before bonus 750,000.00
Multiply by Bonus percentage 0.20
Bonus to A as managing partner 150,000.00
Question 5 Answer: B
Interest on capital 50,000.00
Salary 40,000.00
Equal share in remaining profit 200,000.00
Total share of B in partnership profit 290,000.00

Question 6 Answer: A
K's Average Capital
Date Capital Balance
1-Jan 1,000,000.00
1-Jul 800,000.00
1-Oct 1,500,000.00

Average Capital 1,075,000.00

Interest of K 107,500.00
K
Salary 200,000.00
Interest 107,500.00
Remainder (3:2) 144,000.00
Share of partners in Net Income 451,500.00

Capital Balance of K
Initial Investment 1,000,000.00
Drawings -200,000.00
Additional Investment 700,000.00
Capital Balance 1,500,000.00
Share of K in Net Income 451,500.00
K's capital balance on 12/31/20 1,951,500.00

Question 8 Answer: C D
Interest 150,000.00
Salary 120,000.00
Bonus (750000-450000-180000/120%*20%) 20,000.00
Unallocated 60,000.00
Net Income 350,000.00

Question 9 Answer: B D
Interest (2000000*30%*6/12) 150,000.00
Salaries (30000*6) 120,000.00
Bonus 24,000.00
Unallocated 57,600.00
Net Income 351,600.00

Question 10 Answer: D Samson

Salaries 90,000.00
Interest 10% of 60,000
Bonus 10% of net income after salaries
Remaining 1/3
 Salaries
Samson (40%) 90,000.00
Delilah (60%) 135,000.00
Total 225,000.00

Net Income of 66,000:

Samson
Delilah
Total
 S's Average Capital
No. of months Total Date Capital Balance No. of months
6 6,000,000.00 1-Jan 500,000.00 3
3 2,400,000.00 31-Mar 600,000.00 6
3 4,500,000.00 30-Sep 400,000.00 3
12 12,900,000.00 12

Average Capital 525,000.00

Interest of S 52,500.00
S
400,000.00 600,000.00
52,500.00 160,000.00
96,000.00 240,000.00
548,500.00 1,000,000.00

J Total
300,000.00 450,000.00
60,000.00 180,000.00
20,000.00
40,000.00 100,000.00
400,000.00 750,000.00

J Total
300,000.00 450,000.00
60,000.00 180,000.00
24,000.00
38,400.00 96,000.00
398,400.00 750,000.00

Delilah
135,000.00
10% of 105,000
None
2/3
Net Income
26,400.00
39,600.00
66,000.00
al
Total
1,500,000.00
3,600,000.00
1,200,000.00
6,300,000.00